Correlation Between ELECTRONIC ARTS and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and MGIC INVESTMENT at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ELECTRONIC ARTS and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and MGIC INVESTMENT, you can compare the effects of market volatilities on ELECTRONIC ARTS and MGIC INVESTMENT and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ELECTRONIC ARTS with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and MGIC INVESTMENT.
Diversification Opportunities for ELECTRONIC ARTS and MGIC INVESTMENT
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ELECTRONIC and MGIC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and ELECTRONIC ARTS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ELECTRONIC ARTS are associated (or correlated) with MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and MGIC INVESTMENT
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 1.51 times more return on investment than MGIC INVESTMENT. However, ELECTRONIC ARTS is 1.51 times more volatile than MGIC INVESTMENT. It trades about 0.29 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about -0.17 per unit of risk. If you would invest 11,228 in ELECTRONIC ARTS on December 1, 2024 and sell it today you would earn a total of 1,298 from holding ELECTRONIC ARTS or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. MGIC INVESTMENT
Performance |
| Timeline |
| ELECTRONIC ARTS |
| MGIC INVESTMENT |
ELECTRONIC ARTS and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and MGIC INVESTMENT
The main advantage of trading using opposite ELECTRONIC ARTS and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, MGIC INVESTMENT can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.| ELECTRONIC ARTS vs. LAir Liquide SA | ELECTRONIC ARTS vs. METHODE ELECTRONICS | ELECTRONIC ARTS vs. Electronic Arts | ELECTRONIC ARTS vs. ALTAIR RES INC |
| MGIC INVESTMENT vs. Japan Medical Dynamic | MGIC INVESTMENT vs. SALESFORCE INC CDR | MGIC INVESTMENT vs. Tradegate AG Wertpapierhandelsbank | MGIC INVESTMENT vs. Magnachip Semiconductor |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |